Finance Bill (HC Bill 102)

Finance BillPage 50

years after the end of the period of account in which the contributions
are made.”

(3) After subsection (2) insert—

(2AA) Subsection (2) is subject to subsections (1A) and (2AB).

(2AB) 5Where subsection (3C) applies, no deduction is allowed for an amount
in respect of the contributions for the period except so far as the amount
is a qualifying amount (see subsection (3D)).”

(4) After subsection (3) insert—

(3A) Subsection (3) is subject to subsections (1A) and (3B).

(3B) 10Where subsection (3C) applies, an amount disallowed under
subsection (2) is allowed as a deduction for a subsequent period only so
far as it is a qualifying amount.

(3C) This subsection applies where the provision of qualifying benefits out
of, or by way of, the contributions gives rise both to an employment
15income tax charge and to an NIC charge.

(3D) An amount in respect of employee benefit contributions is a “qualifying
amount” if the relevant tax charges are paid before the end of the
relevant period (and are not repaid).

(3E) For the purposes of subsection (3D)

(a) 20the “relevant tax charges”, in relation to an amount, are the
employment income tax charge and the NIC charge arising in
respect of benefits which are provided out of, or by way of, that
amount, and

(b) the “relevant period” is the period of 12 months immediately
25following the end of the period of account for which the
deduction for the employee benefit contributions would (apart
from this section) be allowable.

(3F) For the purposes of subsections (3C) and (3E),“employment income tax
charge” and “NIC charge” have the meaning given by section 40(7).”

(5) 30After subsection (3F) (inserted by subsection (4)) insert—

(3G) Subsection (3H) applies where—

(a) a deduction would, apart from this section, be allowable for an
amount (the “remuneration amount”) in respect of employees’
remuneration, and

(b) 35in consequence of the payment of the employees’ remuneration,
employee benefit contributions are made, or are to be made, in
respect of the remuneration amount.

(3H) In calculating for income tax purposes the profits of a trade, the
deduction referred to in subsection (3G)(a) is to be treated as a
40deduction in respect of employee benefit contributions made or to be
made (and is to be treated as not being a deduction in respect of
employees’ remuneration).”

(6) Section 866 of ITTOIA 2005 (employee benefit contributions: non-trades and
non-property businesses) is amended in accordance with subsections (7) to
45(10).

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(7) After subsection (2) insert—

(2A) No deduction is allowed under this section in respect of employee
benefit contributions for a period of account which starts more than 5
years after the end of the period of account in which the contributions
5are made.”

(8) After subsection (3) insert—

(3A) Subsection (3) is subject to subsections (2A) and (3B).

(3B) Where subsection (4C) applies, no deduction is allowed for an amount
in respect of the contributions for the period except so far as the amount
10is a qualifying amount (see subsection (4D)).”

(9) After subsection (4) insert—

(4A) Subsection (4) is subject to subsections (2A) and (4B).

(4B) Where subsection (4C) applies, an amount disallowed under
subsection (3) is allowed as a deduction for a subsequent period only so
15far as it is a qualifying amount.

(4C) This subsection applies where the provision of qualifying benefits out
of, or by way of, the contributions gives rise both to an employment
income tax charge and to an NIC charge.

(4D) An amount in respect of employee benefit contributions is a “qualifying
20amount” if the relevant tax charges are paid before the end of the
relevant period (and are not repaid).

(4E) For the purposes of subsection (4D)—

(a) the “relevant tax charges”, in relation to an amount, are the
employment income tax charge and the NIC charge arising in
25respect of benefits which are provided out of, or by way of, that
amount, and

(b) the “relevant period” is the period of 12 months immediately
following the end of the period of account for which the
deduction for the employee benefit contributions would (apart
30from this section) be allowable.

(4F) For the purposes of subsections (4C) and (4E), “employment income tax
charge” and “NIC charge” have the meaning given by section 40(7).”

(10) After subsection (4F) (inserted by subsection (9)) insert—

(4G) Subsection (4H) applies where—

(a) 35a deduction would, apart from this section, be allowable for an
amount (the “remuneration amount”) in respect of employees’
remuneration, and

(b) in consequence of the payment of the employees’ remuneration,
employee benefit contributions are made, or are to be made, in
40respect of the remuneration amount.

(4H) In calculating for income tax purposes a person’s profits or other
income, the deduction referred to in subsection (4G)(a) is to be treated
as a deduction in respect of employee benefit contributions made or to
be made (and is to be treated as not being a deduction in respect of
45employees’ remuneration).”

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(11) The amendments made by subsections (2) to (4) and (7) to (9) have effect in
relation to employee benefit contributions made, or to be made, on or after 6
April 2017.

(12) The amendments made by subsections (5) and (10) have effect in relation to
5remuneration paid on or after 6 April 2017.

37 Disguised remuneration schemes: restriction of corporation tax relief

(1) Section 1290 of CTA 2009 (restriction of deductions: employee benefit
contributions) is amended in accordance with subsections (2) to (5).

(2) After subsection (1) insert—

(1A) 10No deduction is allowed under this section in respect of employee
benefit contributions for a period of account which starts more than 5
years after the end of the period of account in which the contributions
are made.”

(3) After subsection (2) insert—

(2A) 15Subsection (2) is subject to subsections (1A) and (2B).

(2B) Where subsection (3C) applies, no deduction is allowed for an amount
in respect of the contributions for the period except so far as the amount
is a qualifying amount (see subsection (3D)).”

(4) After subsection (3) insert—

(3A) 20Subsection (3) is subject to subsections (1A) and (3B).

(3B) Where subsection (3C) applies, an amount disallowed under
subsection (2) is allowed as a deduction for a subsequent period only so
far as it is a qualifying amount.

(3C) This subsection applies where the provision of qualifying benefits out
25of, or by way of, the contributions gives rise both to an employment
income tax charge and to an NIC charge.

(3D) An amount in respect of employee benefit contributions is a “qualifying
amount” if the relevant tax charges are paid before the end of the
relevant period (and are not repaid).

(3E) 30For the purposes of subsection (3D)

(a) the “relevant tax charges”, in relation to an amount, are the
employment income tax charge and the NIC charge arising in
respect of benefits which are provided out of, or by way of, that
amount, and

(b) 35the “relevant period” is the period of 12 months immediately
following the end of the period of account for which the
deduction for the employee benefit contributions would (apart
from this section) be allowable.

(3F) For the purposes of subsections (3C) and (3E), “employment income tax
40charge” and “NIC charge” have the meaning given by section 1292(7).”

(5) After subsection (3F) (inserted by subsection (4)) insert—

(3G) Subsection (3H) applies where—

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(a) a deduction would, apart from this section, be allowable for an
amount (the “remuneration amount”) in respect of employees’
remuneration, and

(b) in consequence of the payment of the employees’ remuneration,
5employee benefit contributions are made, or are to be made, in
respect of the remuneration amount.

(3H) In calculating for corporation tax purposes the profits of a company, the
deduction referred to in subsection (3G)(a) is to be treated as a
deduction in respect of employee benefit contributions made or to be
10made (and is to be treated as not being a deduction in respect of
employees’ remuneration).”

(6) The amendments made by subsections (2) to (4) have effect in relation to
employee benefit contributions made, or to be made, on or after 1 April 2017.

(7) The amendment made by subsection (5) has effect in relation to remuneration
15paid on or after 1 April 2017.

Capital allowances

38 First-year allowance for expenditure on electric vehicle charging points

(1) CAA 2001 is amended as follows.

(2) In section 39 (first-year qualifying expenditure) after the entry for section 45E
20insert—

“section 45EA expenditure on plant or machinery for
electric vehicle charging point”.

(3) After section 45E insert—

45EA Expenditure on plant or machinery for electric vehicle charging point

(1) 25Expenditure is first-year qualifying expenditure if—

(a) it is incurred in the relevant period,

(b) it is expenditure on plant or machinery for an electric vehicle
charging point where the plant or machinery is unused and not
second-hand, and

(c) 30it is not excluded by section 46 (general exclusions).

(2) For the purposes of this section expenditure on plant or machinery for
an electric vehicle charging point is expenditure on plant or machinery
installed solely for the purpose of charging electric vehicles.

(3) The “relevant period” is the period beginning with 23 November 2016
35and ending with—

(a) in the case of expenditure incurred by a person within the
charge to corporation tax, 31 March 2019, and

(b) in the case of expenditure incurred by a person within the
charge to income tax, 5 April 2019.

(4) 40The Treasury may by regulations amend subsection (3) so as to extend
the relevant period.

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(5) In this section—

  • “electric vehicle” means a road vehicle that can be propelled by
    electrical power (whether or not it can also be propelled by
    another kind of power);

  • 5“electric vehicle charging point” means a facility for charging an
    electric vehicle.”

(4) In section 46 (general exclusions), in subsection (1) after the entry for section
45E insert—

  • “section 45EA (expenditure on plant or machinery for electric
    10vehicle charging point)”.

(5) In section 52 (amount of first-year allowances)—

(a) in the table in subsection (3), after the entry for expenditure qualifying
under section 45E insert—

“Expenditure qualifying under section
45EA (expenditure on plant or machinery
for electric vehicle charging point)
100%”
15

(b) after subsection (3) insert—

(3A) Subsection (3B) applies where the Treasury make regulations
under section 45EA(4) (power to extend relevant period).

(3B) 20The regulations may amend the amount specified in column 2
of the Table in subsection (3) for expenditure qualifying under
section 45EA, but only in relation to expenditure incurred after
the date on which the relevant period would have ended but for
the regulations.”

25Transactions in UK land

39 Disposals concerned with land in United Kingdom

(1) The FA 2016 amendments have effect (so far as they would not otherwise have
effect) in relation to—

(a) amounts that are recognised in GAAP accounts drawn up for any
30period of account beginning on or after 8 March 2017, or

(b) in the case of a straddling period, amounts that would be recognised in
GAAP accounts drawn up for a period of account beginning on 8
March 2017 and ending when the straddling period ends.

(2) In subsection (1)

  • 35“the FA 2016 amendments” means—

    (a)

    the amendments made by sections 76, 77 and 80 of FA 2016
    (corporation tax treatment of certain profits and gains realised
    from disposals concerned with land in the United Kingdom), or

    (b)

    the amendments made by sections 78 and 79 of that Act
    40(corresponding rules for income tax purposes),

  • GAAP accounts” means accounts drawn up in accordance with generally
    accepted accounting practice,

  • “recognised” means recognised as an item of profit or loss, and

  • Finance BillPage 55

  • “straddling period” means a period of account beginning before 8 March
    2017 and ending on or after that date.

(3) In section 161 of TCGA 1992 (appropriations to and from stock), in subsection
(5)(a), for “CTA 2010” substitute “ITA 2007”.

(4) 5Section 79(10) of FA 2016 (which substitutes paragraph (a) of section 161(5) of
TCGA 1992) is to be regarded as always having had effect with the amendment
made by subsection (3).

Co-ownership authorised contractual schemes

40 Co-ownership authorised contractual schemes: capital allowances

10In Part 2 of CAA 2001 (plant and machinery), in Chapter 20 (supplementary
provisions), after the Chapter heading insert—

“Co-ownership authorised contractual schemes
262AA Co-ownership schemes: carrying on qualifying activity

(1) This section applies where the participants in a co-ownership
15authorised contractual scheme together carry on a qualifying activity.

(2) Each participant in the scheme is for the purposes of this Part to be
regarded as carrying on the qualifying activity.

(3) Subsection (2) applies in relation to a participant only to the extent that
the profits or gains arising to the participant from the qualifying
20activity are, or (if there were any) would be, chargeable to tax.

(4) But in determining for the purposes of subsection (1) whether or to
what extent the participants in a co-ownership authorised contractual
scheme together carry on a qualifying activity, assume that profits or
gains arising to all participants from the qualifying activity are, or (if
25there were any) would be, chargeable to tax.

262AB Co-ownership schemes: election

(1) The operator of a co-ownership authorised contractual scheme may
make an election under this section.

(2) The election must specify an accounting period of the scheme as the
30first accounting period in relation to which the election has effect.

(3) That first accounting period must not—

(a) be longer than 12 months, or

(b) begin before 1 April 2017.

(4)
The election has effect for that first accounting period and all
35subsequent accounting periods of the scheme.

(5) The election is irrevocable.

(6) The election is made by notice to an officer of Revenue and Customs.

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262AC Co-ownership schemes: calculation of allowance after election

(1) This section applies where an election under section 262AB has effect
for an accounting period of a co-ownership authorised contractual
scheme (“the relevant period”).

(2) 5The operator of the scheme is to calculate the allowances that would be
available to the scheme under this Part in relation to the relevant period
on the basis of the assumptions in subsection (3).

(3) The assumptions are—

(a) the scheme is a person;

(b) 10the relevant period is a chargeable period for the purposes of
this Act;

(c) any qualifying activity carried on by the participants in the
scheme together is carried on by the scheme;

(d) property which was subject to the scheme at the beginning of
15the first accounting period for which the election has effect—

(i) ceased to be owned by the participants at that time, and

(ii) was acquired by the scheme at that time;

(e) the disposal value to be brought into account in relation to the
cessation of ownership and the acquisition referred to in
20paragraph (d) is the tax written-down value;

(f) any property which became subject to the scheme at a time
during an accounting period for which the election has effect
was acquired by the scheme at that time;

(g) property which ceased to be subject to the scheme at any such
25time ceased to be owned by the scheme at that time;

(h) the disposal value to be brought into account in relation to the
cessation of ownership referred to in paragraph (g) is the tax
written-down value;

(i) the scheme is not entitled to a first-year allowance or an annual
30investment allowance in respect of any expenditure.

(4) The operator of the co-ownership authorised contractual scheme must
allocate to each participant in the scheme a proportion (which may be
zero) of the allowances calculated under this section.

(5) The allocation is to be on the basis of what is just and reasonable.

(6) 35In determining what is just and reasonable—

(a) regard is to be had in particular to the relative size of each
participant’s holding of units in the scheme;

(b) no regard is to be had to—

(i) whether or to what extent a participant is liable to
40income tax or corporation tax, or

(ii) any other circumstances relating to a participant’s
liability to tax.

(7) If the participants in the scheme together carry on more than one
qualifying activity, the calculation and allocation under this section are
45to be made separately for each activity.

(8) The proportion of an allowance allocated by the operator to a
participant under this section for a qualifying activity is the total

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amount of the allowance available to the participant under this Part in
relation to the relevant period by virtue of carrying on that activity as a
participant in the scheme.

(9) In this section “tax written-down value”, in relation to any cessation of
5ownership or acquisition, means such amount as would give rise to
neither a balancing allowance nor a balancing charge.

(10) For the purposes of subsection (9) assume that expenditure to which
the disposal value relates is in its own pool.

(11) For the purposes of subsections (3)(c) and (9), assume that profits or
10gains arising to all participants from the qualifying activity are, or (if
there were any) would be, chargeable to tax.

262AD Co-ownership schemes: effect of election for participants

(1) This section has effect where an election under section 262AB is made
by the operator of a co-ownership authorised contractual scheme.

(2) 15For the purposes of sections 61(1) and 196(1) (disposal events and
values)—

(a) a participant in the scheme is to be regarded as ceasing to own
the participant’s interest in the property subject to the scheme
at the beginning of the first accounting period of the scheme for
20which the election has effect, and

(b) the disposal value to be brought into account in relation to that
cessation of ownership is the tax written-down value.

(3) In subsection (2)(b) “tax written-down value” means such amount as
would give rise to neither a balancing allowance nor a balancing
25charge.

(4) For the purposes of subsection (3) assume that—

(a) expenditure to which the disposal value relates is in its own
pool;

(b) profits or gains arising to all participants from the qualifying
30activity are, or (if there were any) would be, chargeable to tax.

262AE Co-ownership schemes: effect of election for purchasers

(1) This section has effect where—

(a) an election under section 262AB is made by the operator of a co-
ownership authorised contractual scheme,

(b) 35property consisting of a fixture ceased to be subject to the
scheme at any time in an accounting period for which the
election has effect,

(c) in a calculation made by the operator of the scheme under
section 262AC(2) the assumption in section 262AC(3)(g) was
40made in relation to that fixture, and

(d) a person (“the current owner”) is treated as the owner of the
fixture as a result of incurring capital expenditure on its
provision (“the new expenditure”).

(2) In determining the current owner’s qualifying expenditure—

(a) 45if the disposal value statement requirement is not satisfied, the
new expenditure is to be treated as nil, and

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(b) in any other case, any amount of the new expenditure which
exceeds the assumed disposal value is to be left out of account
(or, if such an amount has already been taken into account, is to
be treated as an amount that should never have been taken into
5account).

(3) The disposal value statement requirement is that—

(a) the operator of the scheme has, no later than 2 years after the
date when the fixture ceased to be property subject to the
scheme, made a written statement of the assumed disposal
10value, and

(b) the current owner has obtained that statement or a copy of it
(directly or indirectly) from the operator of the scheme.

(4) Sections 185 (fixture on which a plant and machinery allowance has
been claimed) and 187A (effect of changes in ownership of fixture) do
15not apply in relation to the new expenditure.

(5) In this section “assumed disposal value” means the disposal value that,
in making the calculation referred to in subsection (1)(c), was assumed
to be brought into account pursuant to section 262AC(3)(h).

262AF Co-ownership schemes: definitions relating to schemes

20In sections 262AA to 262AE and this section—

  • “co-ownership authorised contractual scheme” means a co-
    ownership scheme which is authorised for the purposes of the
    Financial Services and Markets Act 2000 by an authorisation
    order in force under section 261D(1) of that Act;

  • 25“co-ownership scheme” has the same meaning as in Part 17 of that
    Act (see section 235A(2) of that Act);

  • “operator” and “units”, in relation to a co-ownership authorised
    contractual scheme, have the meanings given by section 237(2)
    of that Act;

  • 30“participant”, in relation to such a scheme, is to be read in
    accordance with section 235 of that Act.”

41 Co-ownership authorised contractual schemes: information requirements

(1) The Treasury may by regulations impose requirements on the operator of a co-
ownership authorised contractual scheme in relation to—

(a) 35the provision of information to participants in the scheme;

(b) the provision of information to Her Majesty’s Revenue and Customs.

(2)
Regulations under subsection (1)(a) may be made only for the purpose of
enabling participants in a co-ownership authorised contractual scheme to meet
their tax obligations in the United Kingdom with respect to their interests in the
40scheme.

(3) Regulations under subsection (1)(b) may in particular require the provision of
information about—

(a) who the participants in the scheme were in any accounting period of
the scheme;

(b) 45the number and classes of units in the scheme in any such period;

(c) the amount of income per unit of any class in any such period;

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(d) what information has been provided to participants.

(4) Regulations under this section may specify—

(a) the time when information is to be provided;

(b) the form and manner in which information is to be provided.

(5) 5Regulations under this section may make provision for the imposition of
penalties in respect of contravention of, or non-compliance with, the
regulations, including provision—

(a) for Her Majesty’s Revenue and Customs to exercise a discretion as to
the amount of a penalty, and

(b) 10about appeals in relation to the imposition of a penalty.

(6) Regulations under this section may in particular be framed by reference to an
accounting period of a co-ownership authorised contractual scheme beginning
on or after 1 April 2017.

(7) Regulations under this section may contain consequential, supplementary and
15transitional provision.

(8) Regulations under this section must be made by statutory instrument.

(9) A statutory instrument containing regulations under this section is subject to
annulment in pursuance of a resolution of the House of Commons.

(10) In this section—

  • 20“co-ownership authorised contractual scheme” means a co-ownership
    scheme which is authorised for the purposes of the Financial Services
    and Markets Act 2000 by an authorisation order in force under section
    261D(1) of that Act;

  • “co-ownership scheme” has the same meaning as in Part 17 of that Act
    25(see section 235A(2) of that Act);

  • “operator” and “units”, in relation to a co-ownership authorised
    contractual scheme, have the meanings given by section 237(2) of that
    Act;

  • “participant”, in relation to such a scheme, is to be read in accordance with
    30section 235 of that Act.

42 Co-ownership authorised contractual schemes: offshore funds

(1) The Treasury may by regulations make provision about how participants in a
co-ownership authorised contractual scheme are to be treated for income tax
purposes or corporation tax purposes in relation to investments made for the
35purposes of the scheme in an offshore fund.

(2) Regulations under subsection (1) may, among other things, make provision—

(a) for the operator of a co-ownership authorised contractual scheme to
allocate to participants in the scheme amounts relating to investments
made for the purposes of the scheme in an offshore fund;

(b) 40for those amounts to be regarded as income of the participants to whom
they are allocated;

(c) as to when that income is to be brought into account for income tax
purposes or corporation tax purposes.

(3) Regulations under this section may—

(a) 45modify an enactment (whenever passed or made);